Decreased aircraft hours flown and accidents have reduced demand for services.
New York, NY (PRWEB) December 21, 2013
The Aircraft Maintenance, Repair and Overhaul industry has recovered steadily from recessionary shocks in 2008. IBISWorld estimates that industry revenue will grow at an annualized rate of 0.3% in the five years to 2013, including a 5.3% jump in 2013. This same period also experienced a wave of consolidations among industry operators. Moreover, the number of industry establishments and enterprises in the Aircraft Maintenance, Repair and Overhaul industry are expected to decrease at an annualized rate of 0.3%. An increasing number of mergers and acquisitions is driving this trend of consolidation, and IBISWorld expects this trend to continue in the five years to 2018.
Industry operators perform maintenance, repair and overhaul (MRO) services on aircraft. According to IBISWorld Industry Analyst James Crompton, “Demand for these services has recovered in line with improving conditions for airline operators, which experienced decreased consumer spending on travel.” Also, a driving force for industry demand is an increasing emphasis on outsourcing MRO services. While some airlines opt to perform maintenance on their own fleets, airlines are increasingly emphasizing consumer-facing services over other tasks, such as MRO. Additionally, industry operators have been encountering more competition from original equipment manufacturers (OEMs), as OEMs increasingly engage in longer-term contracts with their customers for aftermarket services, such as maintenance. “High levels of industry regulation also require that routine MRO services take place on a regular basis, providing the industry with steady demand,” says Crompton.
In the five years to 2018, IBISWorld expects that industry revenue will grow thanks to increasing demand from domestic airlines, which will benefit from a return of consumer confidence and spending power as the global economy recovers from the recession. While growth in airline demand is favorable for the Aircraft Maintenance, Repair and Overhaul industry, increasing labor costs and levels of competition will constrain growth. IBISWorld forecasts wages and the number of employees will rise at annualized rates of 0.9% and 0.8%, respectively, over the next five-year period.
IBISWorld estimates that the industry has a low level of market share concentration. Despite the low level of concentration, market share held by the four major players has increased in the past five years thanks to prominent merger and acquisition activity. In addition, three of the top four major players are also large aircraft and parts manufacturing companies that have long-term contracts on the repair of their own vehicles and parts. The industry is maturing, and larger companies are looking for ways to expand their presence in the market through nonorganic growth (i.e. revenue growth in addition to increased internal performance).
In the five years to 2018, businesses will continue to face increasing pressure due to high levels of competition, large numbers of industry participants, increasing demands from consumers concerning services and pricing and increasingly stringent safety and environmental regulations introduced by the federal government.
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IBISWorld industry Report Key Topics
Companies in the Aircraft Maintenance, Repair and Overhaul industry provide support services to air transportation operators, such as aircraft inspection and testing; ferrying aircraft between departure gates and taxiways; aircraft maintenance and repair; and aircraft and parts overhaul. The main industry services are commonly referred to as maintenance, repair and overhaul (MRO).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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